How Croydon works: the pleasures and perils of running a family business

By - Tuesday 4th August, 2015

Business adviser Gordon Bull looks at the issues that can arise when relatives share an office

It’s not all about Westfield. Exciting though the coming regeneration of our town centre and the arrival of the £1 billion retail development is, a project this size can tend to grab all the headlines. I know from my work, advising and supporting all kinds of businesses in Croydon, that huge corporations are only part of the local story.

Croydon has a vibrant small- and medium-sized business sector, with some very old and well-established family firms as well as an increasingly exciting and entrepreneurial start-up culture. Advising and working with a great variety of companies that make up our local economy, I’ve learned a lot about the strengths that they have and the challenges that they face and, in particular, about the dangers and delights of running family businesses.

We absolutely worked our socks off for three years

Peter and Diana* were sitting down to dinner and the conversation turned to planning for their twenty-fifth wedding anniversary party which would take place in a few weeks’ time. This prompted some reminiscing about the time they got married, back in 1990. At that time both Peter and Diana had left what many would regard as safe jobs and boarded the exciting rollercoaster ride that is having your own business.

“Do you remember that everyone thought we were mad – particularly our parents?” said Diana. “We had no money, we’d given up safe jobs and effectively started a business on a couple of Visa gold cards. That was the only way that we could borrow at that time. Borrowing that amount on credit cards cost a small fortune and we had to absolutely work our socks off in the first three years to make sure that we paid everything off as soon as possible. And how about getting up at three in the morning to start work and frequently not finishing until midnight? And you were often doing the books and making deliveries as well. It was exciting but we were both exhausted”.

(That’s the first thing to remember: starting a new business means forgetting office hours. And of course, when the people you are working with are a big part of your personal life too, this means a lot of time together under some pressure).

“I certainly do”, Peter replied. “We did everything on a shoestring, we didn’t employ an accountant until we absolutely had to and we didn’t buy anything unless we were certain that the business absolutely needed it”.

“Then once we’d paid off the initial borrowing then we could start to breathe easier and relax our hours, but not by much. We also then employed our first part-time worker”.

We’re alike, but we don’t always see things the same way

“Which was great, wasn’t it? But it also brought new challenges. Suddenly we were employers – someone else besides us depended on our success. And employees have to be managed – there are new relationships within the business and new decisions to take. Up to that point we’d agreed about everything – we’re quite alike, which is probably why we got married! – but we didn’t always see these issues in the same way and we had to find a way of talking about that”.

“For me I’d say that that was when our real business started – we had to take responsibility for installing a PAYE system and actually being responsible for an employee and getting a contract of employment drawn up”.

“Hmmm… yes, all new skills that we had to learn. It was at that point that our accountant who did our payroll suggested that we should consider having a shareholders’ agreement for us, even though we are husband and wife and of course we trust each other. But you have to do things in a business-like way or – well, you can get real problems later on”.

The picture in Croydon is pretty positive now

“Yes, it was good advice. When things are very small they can sometimes also be pretty informal, and run on trust and people’s existing relationships with each other. But that has to change, and systems are very important – scaleable systems which allowed our business to grow”.

“I’d say the picture in Croydon right now is pretty positive, wouldn’t you?”

“Yes, I think that I would. The worst thing for a business is uncertainty – of customers, cash flow, staff, suppliers and the rest of it. The recent ‘depression’ – for that’s what it was, although you rarely hear that term used – had a bad effect on Croydon, emptying office space, businesses closing down or moving away and thus fewer customers and fewer cars coming. At one point the daily commute was almost pleasant! Rush hour traffic is now back with a vengeance”.

“Plus Croydon became a relatively unpopular place, so there was little investment in the offices which are now very old and out of date and thus very cheap. But office rents now are rising as more people see the potential in being based here. The future here is looking brighter, most definitely, not just for us but other Croydon businesses like us.”

*Peter and Diana are composites, illustrating a number of the issues faced by clients.

Gordon Bull

Gordon Bull

Gordon specialises in family companies, and over the years has applied his financial knowledge and expertise to almost every business situation from start-up to retirement. He likes to help clients pin down the ‘why, what and how’ of strategic decisions and their subsequent effects.  This is fulfilled by his role as a business coach with Shirlaws, where he helps business owners create sustainable business growth and brings balance to the lives of the owners and employees alike.

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